Question

Respond to the following in a minimum of 175 words:

The final phase of an audit is addressing contingent liabilities and their relation to the audit.

Discuss a review for contingent liabilities, letters from the client’s lawyers and post-balance-sheet review for subsequent events.

Answer 1

Page No. Date that the business intends to liquidate & there is no alternativ to this course of action then the financial Statements can not be prepared on a going concoin. basis:

Page No. Dale Management requust the testere Auditor mails the lettere Hivilege information - Attorney sind back dbactly to ... auditor! Page No. Dato ego of adjusting events includes Himbaules who tu non ualisable Value falls below the lost puice. letter public must upout violations company's chief legal to of tracercabil w ow customer has become insowent 9. Non . Aduting_earts • fails, letter If the legal officer must report to the Cemile المنهل Non the such they notes adjustment is made to financial statements for events. If material, are disclosed by way of to the financial statements Examples aber Post Balance -shut Review for Aubsequent estats Adjusting events & f at the date of Balance shut, evidence of wents exists that would materially effect the tinancial statements then the francial statements suould be charged to reflect these conditibu СЛОилали Ток кол woya Allah tansactions au putnclas fasad LOR pueduction capacity due to fine, flood etc K date to the balance Aut the directors outermine

Page No Date # Review for -Contagent liabilities upon the contingunt liabilities - liabilities. These are those whose occurrence depends uncertain futurer. Page No. Date Managimuat h uponsible for identifying and deciding on the approud accounting taxatmint for contigout liabilities 11 Auditors 4 Verifying primary objectives in contingent liabilities are 3 conditious are required for a contingent liabilities to exist l- t) Potential future outside panty payment to an • Evaluate the accounting treatment of kneum contingent Mobilites to determine whether management has properly classified the contingency 2) Uncintainity about the amount future payment # Review for lettvis from client is resolwed by some outcome will be future events Client is responsible for any claims, Qament Auditou au uspicially convened. about peuding liabilities - • broduct warrantien.. • Sucom toc disputes . Gausianties chligations Inquing of the client's littera A procedure auditors rely on. for Waluating known litigation and othin claims againt the client. of others